Making Market Volatility Work for You
- Federal banks
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Initial margin is the minimum capital amount needed to open a trade.
Maintenance margin is the minimum capital amount needed to keep the trade open. If your account falls below this amount your broker can liquidate your position without notice. For example, with a $10,000 account… if your initial margin is $5000 and your maintenance margin is $3000, your broken would liquidate the position if your account lost more than $2,000 (the difference between initial and maintenance margins and your account size). I know it sounds like a high school math problem, but it’s really that simple!
Excess margin refers to the money left over in your account in excess of the initial margin requirements to open positions.
Day Trading Margins are the amount set by your broker in order to enter into a trade in $ value per contract during market trading hours. The day trading margins return to the initial margin requirements once the market closes. Once the market re-opens your broker will switch back to day trading margin requirements.
Many of these margins vary by brokerage, so make sure to visit your company’s website FAQ sections to identify their day/initial margin requirements. One benefit to trading futures is that it provides flexibility with trading times available to trade. Unlike equities and options markets, global futures trading is open six days a week for 23 hours a day. This provides multiple opportunities for traders to trade different market sessions including (US/Aussie/Asia/Euro). A benefit to trading futures is that you can choose to trade faster market sessions like the (US/Euro) or you can trade the slower market sessions like the (Aussie/Asia). Markets are open for two main sessions during the day. The US market session, or Day Session, runs from 9:30 AM – 4:15 PM ET. The US market accounts for 30% of futures contracts traded. The Aussie/Asia/Euro market session, also known as the Globex Session, runs from 4:30 PM – 9:30 AM ET. Globex accounts for 70% of futures contracts traded. Regardless of the session you choose, you’ve got plenty of diversity in your market offerings.1. Contract size
2. Tick increments per point
3. Dollar value per tick
4. Dollar value per point
A “point” in this instance is one singular number movement either up or down as measured by your charts (ex: 101 to 102). A “tick” refers to the minimum price investment that your chosen security can move up or down. Knowing this information helps identify which contracts will be suitable to trade for each person’s risk tolerance and account size. For example, someone with a smaller account may consider trading the Nasdaq 100 Mini (NQ) or the Dow Industrial Mini (YM). These markets have a smaller dollar value per point/tick. However, someone with a larger account may consider trading contracts with a larger dollar value per point/tick. Contracts such as Gold (CL) or Russell 2000 Mini (TF) fit into this category. Below we’ve outlined a few examples of the major markets we focus on as a quick reference tool for you to access these contract specifications and risk metrics.
Futures Contract Name (Symbol) |
Smallest Measurement of Movement |
Conversion Rate in Contract $ Value |
How Much That Movement is Worth |
E-Mini S&P 500 (ES) |
1 point = 4 ticks |
1 tick = $12.50 |
1 point = $50 |
Nasdaq 100 Mini (NQ) |
1 point = 4 ticks |
1 tick = $5.00 |
1 point = $20 |
Dow Industrial Mini (YM) |
1 point = 1 point |
1 point = $5.00 |
5 points = $25 |
Russell 2000 Mini (TF) |
1 point = 10 ticks |
1 tick = $10.00 |
1 point = $100 |
Oil (CL) |
moves in pennies (.01) |
1 pennie = $10.00 |
10 cents = $100 |
Gold (GC) |
moves in ten cent increments (.10) |
each increment is worth $10.00 |
1 dollar = $100 |